China, the world's second-largest economy, delivered another
positive economic data point overnight as the country's official
purchasing managers' index for the services sector soared to 56.1
in December from 55.6 in November. A surge in construction services
to 61.9 from 61.3 in November lead the way, bolstering proof that
China's economy is in fact turning around.
Predictably, the turnaround in China's economy and its equities
has lifted the fortunes of an array of
China-specific and other emerging markets ETFs
. However, investors looking to play a China rally with sector
ETFs
have some compelling options as well.
The still new iShares MSCI Global Select Metals & Mining
Producers Fund (NYSE:
PICK
) comes to mind. PICK will celebrate its first birthday at the end
of this month and over that time, the ETF has been a prodigious
gather of assets, raking in $263.5 million in assets under
management. That is an impressive tally for less than a year of
work.
Importantly, several of PICK's 285 holdings are intimately
levered to a rebounding Chinese economy, as Street One Financial
Vice President Paul Weisbruch highlights in a research note out
today.
"With China based equities finally springing to life after a
period of prolonged under-performance and noting that China is the
largest single country component of the broad based MSCI Emerging
Markets Index (19.01% weighting currently), PICK is well positioned
to benefit from any demand for metals used in the
construction/infrastructure build out process that is often linked
to China and other emerging economies," said Weisbruch.
BHP Billiton (NYSE:
BHP
), the world's largest mining company, alone represents almost 20
percent of PICK's weight. Rivals Rio Tinto (NYSE:
RIO
) and Vale (NYSE:
VALE
) are also found among PICK's top-10 holdings along with U.S.
copper giant Freeport-McMoRan (NYSE:
FCX
).
Weisbruch also notes that since PICK debuted in last January,
the fund has outperformed the more established SPDR S&P Metals
& Mining ETF (NYSE:
XME
). XME has over $1 billion in AUM, but over the past six months,
PICK is up 15.3 percent compared to a gain of 7.8 percent for
XME.
Over the same time horizon, PICK has sharply outperformed Rio
Tinto, Vale and Freeport. And although PICK is a sector fund, it
does give investors plenty of emerging markets exposure at the
country level. Brazil, South Korea, South Africa and Mexico are
top-10 country weights.
The fund also offers modest exposure to Taiwan, Russia, China,
Indonesia, Malaysia, Chile
and Turkey among others
.
Investors get all that with PICK for an annual expense ratio of
0.39 percent, which compares favorably with several popular,
materials-heavy emerging markets ETFs.
For more on ETFs, click
here
.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice.
All rights reserved.
Gain access to more investing ideas, tools & education.
Get Started on Marketfy, the first ever curated
& verified Marketplace for everything trading.